The management of MFI saved the troubled kitchens retailer from administration last night when it secured financing for its acquisition.

However, the rescue could result in the closure of up to 100 of the high street chain's 200 stores, although the new owners would not confirm their plans last night.

Gary Favell, the chief executive, said that the existing management would complete the buyout in 24 hours, thanks to cash handed over by the investment company Merchant Equity Partners (MEP), the present owner.

He promised business as usual, so customers would continue to have kitchens fitted and repaired, and said that executives planned to improve the operation by increasing the number and quality of concession partnerships within its stores.

“The MBO [management buyout] will secure the future of the MFI business and safeguard employees within the store network,” a statement read. “Importantly, all customer orders will continue to be fulfilled and trading continues as normal.”

MFI had been locked in crucial talks all weekend about securing funds for a management buyout. The struggling company had lined up Kroll, the corporate restructuring specialist, to act as administrator in case discussions had failed. Rental payments to landlords fall due this week and there were concerns that MFI, which has a workforce of 3,100, was about to become the most high-profile retail collapse since the credit crunch began.

MFI said that the buyout would be funded through a “substantial cash dowry payment from MEP”, which will secure deposits paid by customers. However, after the transaction, MEP will no longer be a shareholder in the business. Sources said that MEP had made back more than the £95million it had invested in the business.

Mr Favell said: “Fundamentally, it is business as usual for MFI, its employees and customers. In fact, sales in recent weeks have been ahead of plan. MFI is a great retail brand and I look forward to leading the management team as we build further on our market leading position.”

MEP, which is run by Henry Jackson, the former investment banker, purchased MFI for £1 two years ago. Other MEP partners include John von Spreckelsen, the former chairman of Somerfield, and David Hamid, the former chief executive of Halfords, who is also chairman of MFI. MEP invested £200million in the retailer with the financial help of Goldman Sachs and Hilco, the retail specialist.

The Times revealed on July 15 that MFI had drafted in Kroll after the collapse of one of its rivals. In July, MFI also announced plans to close a call centre in Sunderland, with the loss of 170 jobs.

The furniture sector has been hit hard by the consumer downturn. ScS Upholstery, the sofa chain, went into administration before Sun European Partners bought the trading operation for a negligible sum.

MFI is understood to have considered a merger with Homeform, a British rival that owns Moben Kitchens, or Magnet, but talks came to nothing.

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